Powder River Basin

The Powder River Basin (PRB) is a region in southeast Montana and northeast Wyoming about 120 miles east to west and 200 miles north to south known for its coal deposits. It is the single largest source of coal mined in the United States and contains one of the largest deposits of coal in the world. Most of the active coal mining in the Powder River Basin actually takes place in drainages of the Cheyenne River. Because of the Powder River Basin, Wyoming has been the top coal-producing state in the United States since 1988.

In 2007, the Powder River Basin alone produced 436 million short tons (396 million tonnes) of coal, more than twice the production of second-place West Virginia, and more than the entire Appalachian region. Overall, the Powder River Basin accounts for about 37 percent of U.S. coal production. The Black Thunder Mine and the North Antelope Rochelle Mine are the most productive coal mines in the United States; in 2006 Black Thunder Mine alone produced 84 million metric tons of coal, more than any state except Wyoming, West Virginia, and Kentucky.

The majority of the coal mined in the PRB is part of the Fort Union Formation. Because of its low sulfur and fly ash content, this coal is exported outside the region and supplies of the coal in the region makes it very desirable. Coal supplies about half of the United States electricity supplies, with the PRB mines supplying around 40% of the coal that fuels those stations, mainly to the east of the Rocky Mountains.

In 2009 Wyoming coal production dipped 8.5 percent compared to 2008. As of June 2010 Wyoming production was down 2.8 percent compared to the same time in 2009.

Over a two month period, from May 2010 to July 2010, market prices for Powder River Basin coal had jumped from $11.50 to $14.50 per short ton.

Reserves
The Powder River Basin coal beds are shaped like elongated bowls and as mines expand from east to west in the Powder River Basin, they will be going "down the sides of the bowl." As the stripping ratio (the ratio of rock that needs to be moved to get to a ton of coal) increases, coal becomes increasingly uneconomical to mine. For this reason, the amount of recoverable coal is far less than the total estimated resource of 800 billion US tons.

In November of 2009 the bank HSBC released a report entitled, "The Green Side of Black" that made estimates about coal's involvement in the future of the U.S. energy economy. In it, the bank reported that coal, even under cap-and-trade, will be a lucrative industry in the future. The author of the report also stated that Wyoming's Powder River Basin will be growing faster than other coal regions in the United States. The HSBC report stated that Arch Coal and Peabody Energy will be especially prosperous because of their extensive involvement in the Powder River Basin.

Powder River Basin Air Permit Lawsuit Dismissed
On March 5, 2010 the Powder River Basin Resource Council and Sierra Club lost a case in the Wyoming Supreme Court where the groups had challenged an air quality permit that the Wyoming Department of Environmental Quality issued for the Dry Fork Station in 2007. The plant is closing in on 75 percent completion rate as of March 2010. The Supreme Court ruling lifts one of the last remaining obstacles for the plant's completion. The plant's $1.3 billion cost includes $334 million in pollution-control equipment.

The groups involved in the suit claimed the plant could degrade air quality the Northern Cheyenne Indian Reservation in southern Montana. The plant is to be located 60 miles south of the reservation. The environmental groups argued that worst-case computer modeling showed the plant's emissions, combined with emissions from existing plants in Montana, could cause high levels of pollution on the Northern Cheyenne reservation. However, the justices on the Wyoming Supreme Court ruled that the state regulators granted the permit correctly.

Reassessment of the Gillette field
Virtually all the coal mined in the Powder River Basin (431 million tons out of the 436 million tons mined in the entire basin in 2006) comes from the Gillette field. In 2008 the U.S. Geological Survey released a detailed assessment of the coal resource in the Gillette field. USGS concluded that the portion of the recoverable coal that can be mined, processed, and marketed at a profit, based on conditions in 2007, including $10.47 per ton and assuming an 8 percent rate of return, is 10.1 billion short tons for the six coal beds evaluated. This is about half the estimate arrived at by a 2002 study of the same field, which arrived at an economically recoverable resource of 23 billion short tons. However, if the price of coal is assumed to be $14.00 per ton, matching the sales price of coal for the Gillette coalfield as of March 2008, the reserve would be 18.5 billion short tons, assuming no increase from 2007 operating costs. If cost per ton rose to $60, the estimated reserve would rise to 77 billion short tons.

Coalbed methane
Recent controversy surrounds the extensive coalbed methane (CBM) extraction in the region. In the last decade, nearly 7000 of these wells have been drilled. Extracting the gas requires water to be pumped to the surface in order to release the gas trapped in the coal seam. While some of the water is successfully utilized in agriculture production such as livestock water and crop irrigation, some waters are naturally high in salinity.

This high salt content has raised concerns in Montana's Custer County where water from the Tongue River provides irrigation for local farming operations. State regulators believe this high salinity content is at least partially to blame on coalbed methane operations in Wyoming where millions of gallons of water is pumped from coal seams to bring gas to the surface. The water is then discharged back into the Tongue, Powder and Little Powder rivers, all of which drain into Montana from Wyoming.

In an attempt to decrease the salinity of the water, the EPA has backed Montana's attempt to regulate salt content of the rivers. However, in October of 2009 U.S. District Judge Clarence Brimmer in Cheyenne, Wyoming ruled that the EPA failed to review scientific studies made by the natural gas industry. Brimmer wrote in his decision that Montana's water quality standards "were not based on sound science." As of late October 2009, the EPA had yet to decide if it would appeal the ruling. Many believe that this dispute, along with others stemming from Wyoming's CBM discharges and Montana's regulations, may well be the setting of the region's next big water war.

Wyoming's CBM industry, as well as its large coal extraction economy, is booming. Over the course of the next two decades it is estimated that CBM firms will drill 77,000 new gas wells in addition to the already 30,000 existing wells. Most of these new wells will be located in Wyoming's portion of the Powder River Basin.

Coal Gasification
On January 25, 2008, Peabody Energy and GreatPoint Energy announced that Peabody would be the primary supplier of coal for GreatPoint Energy's gasification stations, which GreatPoint plans to construct in the Powder River Basin. As of spring 2009, GreatPoint had opened a large-scale pilot station at the Brayton Point power station in Somerset, MA and intends to take their coal gasification process to the commercial scale in the near future.

Wyoming Prepares to Plug Coalbed methane Sites
In June 2010 it was announced that Wyoming Oil and Gas Conservation Commission set a July 1, 2010 deadline for the Wyoming Consolidated Gas Corp. to bring 42 of the company's abandoned coalbed methane wells on state lands into compliance. It is purported that plugging the old wells will decrease the amount of coalbed methane water the flows they discharge. It has been suggested that a ban on coalbed methane wells would save 3.3 billion barrels of groundwater in the Powder River Basin.

Transportation
Rail transportation and coal-fired power generation are heavily interdependent, with railroads accounting for 70 percent of coal shipments to power plants nationally, and coal accounting for about 20 percent of rail business. Alternative shipping methods include truck, barge, and conveyor. Truck shipping is considered uneconomical beyond 50 miles; barges are limited by the reach of navigable waterways, and thus is not an option in the Powder River Basin; conveyors only work in cases where the mine is adjacent to the plant.

The cost of coal extracted from the mines would retail at the mines for around $5 a ton. However, the power stations and plants of the Eastern United States pay in excess of $30 ton - the difference made up by the cost of transportation.

Due to the volumes and resultant cash flow from the coal that is accessible, there is a joint railway line owned by the BNSF Railway and the Union Pacific Railroad which runs the length of the southern section of the PRB. A third railroad, the Dakota, Minnesota and Eastern Railroad, has faced strong resistance from an unusual array of parties for its attempts to extend its rail line into the coal mining area - more so since its agreed purchase by the Canadian Pacific Railway.

In the summer of 2009 the Dakota, Minnesota & Eastern Railroad began to abandon a massive rail expansion project in the Powder River Basin. The railroad project was set to expand the company's operations into the area to transport coal to regional coal-fired power plants. The economic downturn and rise in climate change awareness are noted as the reasons that led to the decision to back off the plan. Nonetheless, no decision has been made to permanently shelve the project.

History
Originally a single track Burlington Northern Santa Fe (BNSF) line, it ran south from Donkey Junction, Wyoming in the north 13 miles to Caballo, Wyoming; and then for 103 miles to Shawnee, Wyoming. The Chicago and North Western Railway ran close to the northern section, as did the UP at Caballo.

Having already formed the Western Railroad to distribute PRB coal, in 1982 C&NW and the UP formed Western Railroad Properties, Inc. (WRPI), to acquire half interest in BN coal line from Shawnee Junction to Coal Creek Jct. On December 15, 1986 WPRI purchased 11 miles more of BN line from Coal Creek Jct. to East Caballo Jct. Beginning June 27, 1983, WPRI constructed six miles of new railroad from Shawnee Jct. to Shawnee, rebuilt 45 miles of C&NW line from Shawnee to Crandall, Wyoming and converted 56 miles of new railroad from Crandall to Joyce, Nebraska. The first commercial train ran on August 16, 1984. UP acquired ownership of C&NW in April 1995.

By 1985, single track for almost its entire length it was handling 19 million tons of coal - but implementation of the second stage of the Clean Air Act (1990) meant that demand for Western low-sulfur coal would rise quickly. The C&NW was struggling to be able financially to upgrade capacity to dual track, which resulted in numerous failures on the line in 1994, and C&NW's absorption by the UP in 1995. The UP spent $855 nillion over the next five years via the Project Yellow III from 1996, expanding capacity over its entire network to handle coal shipments from the PRB. By 2005 the Joint Line capacity had grown to handle an all-time record 325 million tons, and was either dual or three track capacity for its entire length.

On November 3, 2009 it was announced that billionaire investor Warren Buffett's Berkshire Hathaway Inc. acquired 77% of Burlington Northern Santa Fe for $34 billion, prompting the Wall Street Journal to write that Buffett is betting on the continued role of coal in the U.S. energy supply. Burlington Northern transports coal that accounts for about 10% of the total U.S. energy supply, with 90% of that mined in the Powder River Basin.

Present
As a result of various trackage and locomotive failures on the Joint Line, in late 2004/early 2005 the line failed to deliver the amount of contracted coal supplies, and electricity rates increased by 15 percent. Coal customers threatened to look at alternate sources of energy and transportation, including the Arkansas Electric Cooperative Corporation. As a result, the 280 mile expansion of the DM&E was approved by the Surface Transportation Board, and in 2006 the Joint Line capacity was planned to be raised again via a $200 million investment to provide three track capacity for its entire length plus a fourth track added over the steepest sections, including Logan Hill. These improvements will enable the Joint Line to handle in excess of 400 million tons of coal.

Presently more than eighty train loads of coal, which vary in size from 125 to 150 cars, are shipped from southern PRB mines each day. In 2006, Union Pacific set a record by hauling 194 million tons of coal &mdash; an 8 percent increase compared with 2005 tonnage. The company achieved this by increasing train size, with trains averaging more than 15,000 tons, a 200-ton weight increase compared with fourth-quarter 2005’s average.

In early May 2011 it was announced that Burlington Northern Santa Fe railway would impose a new tariff for coal dust suppression on its coal train fleet. The tariff came after a March 2011 ruling by the U.S. Surface Transportation Board. The ruling capped a year long battle between the railroad and utilities over just who is responsible to pay for dust suppression along thousands of miles of rail used to connect the Powder River Basin to coal-fired power plants across the U.S. Coal customers will now have to pay an extra few million dollars per year to help control coal dust from loaded trains leaving Wyoming.

Joint Line
The 103 mile “Joint Line” in Wyoming, the artery through which most Powder River Basin coal reaches the rest of the United States, is the busiest stretch of railroad in the world. The Joint Line handles over 60 loaded coal trains a day, each train more than a mile long. After it passes through the Joint Line, coal then travels over a handful of rail corridors to power plants. Most Powder River Basin coal originates with the Union Pacific Railroad or the Burlington Northern Santa Fe Railway.

In June 2011 A federal panel has rejected an attempt by conservationists to halt the construction of a long-stalled 121-mile railroad that would open a new area of Montana to coal mining.

The Montana Surface Transportation Board said opponents failed to show why the $550 million rail line needed further environmental review. The decision came in response to a petition by the Northern Plains Resource Council and Montana rancher Mark Fix, who lives along the proposed railroad route. The Tongue River Railroad would make it easier to get coal from the basin to ports on the West Coast by providing a new connection to an existing BNSF Railway Company line in Miles City.

Powder River Basin Coal Operations
Demand for coal to generate electricity to produce steel in China and India has increased in recent years. Peabody Energy announced on October 20, 2009 that demand for coal in these countries will grow 7 to 8 percent annually over the course of the next five years. The company says that coal from Mongolia will supply China while coal from Australia will handle the increased Asian demand. Peabody president Richard Navarre noted that production at Peabody's mines in the Power River Basin will also help supply the growing market in China and India.

On November 12, 2009 Arch Coal (ACI) announced that they are leasing 9,600 acres in southeastern Montana's Powder River Basin. It is estimated that the property holds 731 million tons of coal reserves. The company will pay Great Northern Properties five annual installments of $73.1 million. On March 12, 2010 it was announced that Arch Coal purchased a 35 percent minority equity stake in the developing Trailblazer Energy Center. Arch stated that they will supply Trailblazer with its fuel needs for its first 20 years of operations. Coal burned in the plant will come from Arch's mines in the Powder River Basin. Arch believes that the plant will eventually utilize so-called "clean coal" technology. In 2009 Arch donated $1.5 million to the University of Wyoming for research on carbon sequestration.

In late December, 2009, Montana Demcoratic Gov. Schweitzer, along with five other Democrats, voted to lease 610 million tons of coal over 9,500 acres near Ashland, Montana, known as Otter Creek coal, which will in part be paid for by Montana taxpayers. Critics of the deal believe that, "The main beneficiaries of leasing Otter Creek coal won't be coal miners or schools or the Northern Cheyenne or the residents of Powder River County. It will be coal speculators and the proposed Tongue River Railroad."

On March 17, 2010 Arch Coal put in the first bid for rights to mine Montana's Otter Creek coal at $86 million. This would include future royalties for the right to mine a 500 million tons of state-owned coal in southeastern Montana near the Wyoming border in the area known as the Powder River Basin. As of early 2010, Arch controlled 731 million tons of coal in Otter Creek. On March 18 it was announced that the Montana Land Board approved the company's bid and will now have the rights to mine 8,300 acres in the area.

Peabody sends Powder River Basin coal to Europe
It was announced in October 2010 that Peabody Energy was exporting production from its Powder River Basin mines to European markets. Peabody exports Powder River Basin coal through existing ports to Europe, Chile and Asia. It is also looking at building a large coal export facility in Oregon. Peabody has contracted 90% of its 2011 production from the Powder River Basin mines, but the company stated that it has coal volumes available for 2012 and 2013.

DM&E Project
In 1997, the Dakota, Minnesota & Eastern Railroad (DM&E), proposed in 1997 a new route into the Powder River Basin. The project would involve upgrading 600 miles of existing rail lines and building about 250 miles of new track. If completed, the DM&E project would open a new outlet for PRB coal into the Midwest, bypassing the Joint Line and the existing BNSF and UP main line rail corridors. The project has not yet secured financing. In February 2007 the Federal Railroad Administration rejected the project’s application for a $2.3 billion loan guarantee, concluding that the project was too risky to commit public funds. The project has been opposed by some landowners and towns along the proposed route, in particular by the city of Rochester, Minnesota, and the Mayo Clinic.

Legislative proposals
The following are recent legislative proposals affect railroads:
 * the Freight Rail Infrastructure Capacity Expansion Act of 2007 (S. 1125 and H.R. 2116)
 * the Railroad Competition and Service Improvement Act of 2007 (S. 953 and H.R. 2125)
 * the Railroad Antitrust Enforcement Act of 2007 (S. 772 and H.R. 1650).

Report released outlining risks and costs of Powder River Basin coal mining expansion
A report released in January 2011 by the Western Organization of Resource Councils (WORC) titled Exporting Power River Basin Coal: Risks and Costs laid out several negative environmental impacts from expanding PRB coal mines and exports.

First, WORC noted that an increase in greenhouse gas emissions would ultimately occur, contributing to global warming, stating that "Exporting 140 million tons a year would produce roughly 280 million tons of CO2 per year." Second, WORC wrote that a coal mining increase would impact the local environment and surrounding communities, citing in particular air quality degradation due to an increase in particulate matter and land and water strains.

WORC also reported that new rail lines would cause disruption to farm and ranch land and could negatively impact migratory animal corridors. More railways would also impact public safety with an increase in the potential for accidents. Diesel pollution would also increase because trucks and vehicle transportation would expand. Coal Dust was also noted as increasing due to mine expansions, which could cause harm to water and people.

Tennessee plant closure dents PBR coal demand
Following Tennessee Valley Authority's proposed closure of the Johnsonville Fossil Plant in Tennessee, as part of an EPA settlement in April 2011. One million tons of Powder River Basin coal is burned in the plant each year. The closure will phase out 2,700 megawatts of Tennessee Valley Authority’s 17,000 megawatts of coal-fired capacity by 2017.

American Electric Power's plant closures to impact PBR coal production
On June 9, 2011 American Electric Power announced that the company planned to close 21 coal-fired electricity units. AEP purchases about 24 million tons of coal from the Powder River Basin each year, or more than a third of the coal used by the company.

At least one of the power plants due to be partially closed, the Welsh Power Plant in Pittsburg, Texas, is entirely fueled by the basin’s coal, according to AEP. The Kammer Plant that is in Moundsville, W.V., another AEP power plant slated for closure, blends the basin’s coal into the mix it burns.

As of June, 2011 it was unclear how the potential closures would affect the utility’s purchase of coal from the Powder River Basin, said AEP spokeswoman Melissa McHenry.

Cloud Peak Energy to ship more Powder River Basin coal to Asia
In June, 2011 Cloud Peak Energy signed a 10-year deal to ship basin coal to Asia from a port on Canada’s Pacific Coast. Cloud Peak Energy Inc. signed the deal with Westshore Terminals to ship coal through its Westshore Terminal in Vancouver, British Columbia. The company shipped 3.3 million tons of coal through the terminal to Asian customers in 2010. Cloud Energy operates the Antelope Coal Mine, Cordero Rojo Mine, Spring Creek Mine, Decker Mine, and Jacobs Ranch Mine in the Powder River Basin.

Ownership
As shown in the map below of the Gillette field, the core production area of the Powder River Basin, the Federal government is the primary owner of coal.

The mines in the Powder River Basin typically have less than 20 years of life remaining. Almost all of the coal in the Powder River Basin is federally owned and further mine expansions will require a series of federal and state approvals, as well as large investments in additional mine equipment and transportation options to begin the excavations.



Decertification of Powder River Basin as a coal-producing region
A 2009 WildEarth Guardians report "Undermining the Climate" found that coal mining in the Powder River Basin of northeastern Wyoming and southeastern Montana is the largest contributor to global warming in the United States, a distinction made worse by a federal coal leasing program that has diminished competition and undermined regulatory efforts to address global warming.

According to the report, the Bureau of Land Management (BLM) in 1990 “decertified” the Powder River Basin as a “coal production region,” allowing BLM to avoid following standard leasing procedures and enabling coal companies, rather than the federal government, to design lease boundaries that preclude competition. The report found that in the last 20 years, only three lease sales out of 21 had more than one bidder. The decertification also thwarts the BLM from doing a regional analysis of global warming impacts in the region from coal mining, and has blocked the agency from limiting coal leasing or otherwise adopting measures to address global warming.

As of November 2009, the BLM was pushing to offer 12 new coal leases in the Powder River Basin that would collectively mine up to 5.8 billion tons of coal—as much coal as has been mined from the region in the last 20 years.

The report recommends that BLM should refrain from issuing its 12 proposed coal leases, "recertify” the Powder River Basin a “coal production region” to restore competitiveness, prepare a regional environmental analysis that addresses the global warming impacts of coal mining in the Powder River Basin, and address the impacts of any new coal leases by requiring coal companies to pay a carbon fee for new leases that would be used to create a Global Warming Impact Fund.

BLM denies petition to re-certify PRB as coal producing region
In Feb. 2011, the U.S. Bureau of Land Management denied the 2009 petition by WildEarth Guardians and the Sierra Club asking the BLM to change the federal leasing policy so that the BLM alone would decide which coal reserves to sell. Since 1990, the government has allowed the coal industry to nominate deposits to mine in the Powder River Basin in Wyoming and Montana. The groups said that having the federal government follow formal leasing procedures, including consideration of environmental and economic impacts and competitive bidding, would help create more competition for the leases while improving oversight of coal's contribution to climate change. BLM Director Bob Abbey said the existing process provides an "optimum" public return, and that limiting coal mining in one area would not affect worldwide coal use or climate change.

Proposed mines

 * Otter Creek

Active mines

 * Buckskin Mine
 * Rawhide Mine
 * Dry Fork Mine
 * Eagle Butte Mine
 * Wyodak Mine
 * Caballo Mine
 * Belle Ayr Mine
 * Cordero Rojo Mine
 * Coal Creek Mine
 * Black Thunder Mine
 * North Antelope Rochelle Mine
 * Antelope Coal Mine
 * Jacobs Ranch Mine

Northwest ports to be used to export Powder River Basin coal to Asian markets
For more information on the proposed port developments in the western United States please visit the Coal exports from northwest United States ports article.

Proposed Millennium Bulk Logistics Longview Terminal
In September 2010 Peabody Energy announced that "Coal's best days are ahead." Peabody stated that exports of coal from the Powder River Basin in Montana and Wyoming will be central to its expansion goals. The Oregonian in September 2010 reported that Northwest ports, and in particular ports in Portland, Oregon, may be used in the future to export coal to Asia. The Port of Portland said it doesn't have the space for coal exports in the short-term, but its consultants cited coal as a potential long-term market if it adds terminals on West Hayden Island.

In early November 2010 Australia-based Ambre Energy asked Cowlitz County officials in southern Washington State, which borders Oregon, to approve a port redevelopment that would allow for the export of 5 million tons of coal annually. On November 23 Cowlitz County officials approved the permit for the port redevelopment, which is to be located at the private Chinook Ventures port in Longview, Washington. Coal terminals also are proposed at two other sites along the Columbia River.

Environmentalists stated that they would oppose any such actions, arguing that coal contributes to pollution and global warming. Early discussion of how many jobs the port would produce was roughly twenty total.

In November 2010 Powder River Basin coal producer Cloud Peak Energy CEO Colin Marshall stated that a coal port on the West Coast was "absolutely more than a pipedream."

Other Powder River Basin producers, including top US coal miner Peabody Energy, have talked about the potential for a new export facility on the West Coast, with Oregon and Washington being mentioned as the top locations of choice.

Groups including the Sierra Club and Columbia Riverkeeper have vowed to stop the industry's expansion into Asia, a market currently dominated by coal from Australia and Indonesia.

In May 2011 Arch Coal announced that it was establishing a new subsidiary, Arch Coal Asia-Pacific Pte. Ltd., and named Renato Paladino president. A press release stated that Paladino will be responsible for Asia-Pacific regional business development, marketing and sales of thermal and metallurgical products, and regional supply chain expansion for the company. The new office will be located in Singapore.

Proposed Terminal: Gateway Pacific Terminal
The Gateway Pacific Terminal is a proposed terminal at Cherry Point near Ferndale, Washington, and would have a maximum capacity of about 54 million tons. On February 28, 2011, SSA Marine applied for state and federal permits for the $500 million terminal, triggering formal environmental review. If approved, the terminal would begin construction in early 2013 and operations in 2015.

On March 1, 2011, Seattle-based SSA Marine announced it had entered into an agreement with St. Louis-based Peabody Energy to export up to 24 million metric tons of coal per year through the Gateway Pacific Terminal. Goldman Sachs owns a portion of SSA Marine's parent company. According to Peabody, the terminal in Whatcom County would serve as the West Coast hub for exporting Peabody's coal from the Powder River Basin of Wyoming and Montana to Asian markets. The project would ramp up potential U.S. coal exports to Asia from Washington state. Another coal export terminal proposed in Longview, the Millennium Bulk Logistics Longview Terminal in southwest Washington, has drawn environmental opposition. That Millennium Bulk Logistics terminal would be a joint venture between Australia-based Ambre Energy and Arch Coal.

Environmental groups have appealed to Washington's Shoreline Hearings Board over a permit awarded for the port by Cowlitz County commissioners.

According to Gateway Pacific Terminal's website the company plans on providing a "highly efficient portal for American producers to export dry bulk commodities such as grain, potash and coal to Asian markets." Additionally, the site contends that the "Gateway project will generate about 4,000 jobs and about $54 million a year in tax revenue for state and local services. Once in full operation, it's estimated that Gateway will provide almost $10 million a year in tax revenue, create about 280 permanent family-wage jobs directly, and nearly 1,400 additional jobs through terminal purchases and employee spending."

During the week of June 6-10, 2011 SSA Marine filed a permit application the proposed Gateway Pacific Terminal. The application read:

"The applications submitted herein will cover the difference in scope between that approved project and our full buildout plan."

The earlier permit was noted in the application was approved by the Whatcom County Council in 1997. At that time, it envisioned a 180-acre development that would handle 8.2 million tons of cargoes per year, including petroleum coke (produced by local refineries) iron ore, sulfur, potash and wood chips. Coal was not mentioned an an export commodity in the earlier permit.

Later in June 2011, Whatcom County officials announced that SSA must apply for a new permit for its proposed Gateway Terminal.

Port of St. Helens potential candidate for coal export to Asia
In June 2011, The Oregonian reported that the Port of St. Helens in Columbia City, Oregon was being eyed as a potential Northwest port that would export coal to Asian countries. It was also reported that Columbia Riverkeeper, which opposes coal export, asked a judge to require St. Helens Port to release all of its coal-related documents. In a response, a lawyer for the port stated that doing so would violate a confidentiality agreement and "would result in the greatest harm to the public interest which can be imagined -- a loss of jobs in our community."

Oregon Democratic Gov. John Kitzhaber, wrote in a statement to The Oregonian that the terminal "should not happen in the dead of night. We must have an open, vigorous public debate before any projects move forward."

State of Montana Approves Otter Creek Coal Lease in Powder River Basin
In December 2009 the state of Montana granted the the right to lease and mine its 616 million tons of coal reserves known as Otter Creek in the Powder River Basin. Montana received the reserves from the Federal Government at the beginning of the decade. Montana Governor Brian Schweitzer, a proponent of coal development, sits on the board along with other Montana officials. The bid package proposed by state officials included a rental fee of $3 per acre and an upfront payment of between 10 cents and 35 cents per ton of coal, which translates to approximately $57 million to $200 million. Developers would also pay the state a royalty of 12.5 percent of the mined coal's market value if mining begins.

The Montana Land Board voted 4-1 in favor of leasing the mining rights to Otter Creek coal reserves. The board set the minimum bid at 25 cents per ton, which is two-and-a-half times the amount Arch Coal agreed to pay in November for the rights to develop 730 million tons of coal on adjacent, private lands. Coal companies have until February 8, 2010 to submit bids.

It was announced on February 9, 2010 that no mining companies had bid on the state parcels of Otter Creek. Arch Coal and others stated that the reason was the Land Board had placed too high of a price on the land, making it economically risky to invest in mining operations on the state land. On February 16, 2010 the Land Board voted 3-2 to lower the price of Otter Creek coal. The price was lowered from 25 cents a ton ($143 million) to 15 cents a ton ($86 million). In Wyoming, recent coal leases there went for as much as six times that amount, or 96 cents per ton. Land Board officials noted that most of the mines in Colorado were close to other existing mines, which had access to roads and railways. Otter Creek parcels are not close to existing transportation routes, which will require more investments over the long-run.

On March 17, 2010 Arch Coal put in the first bid for rights to mine Montana's Otter Creek coal at $86 million. This would include future royalties for the right to mine a 500 million tons of state-owned coal in southeastern Montana near the Wyoming border in the area known as the Powder River Basin. As of early 2010, Arch controlled 731 million tons of coal in Otter Creek. On March 18 it was announced that the Montana Land Board approved the company's bid in a 3-1 vote and Arch Coal will now have the rights to mine 8,300 acres in the area.

On July 13, 2010 Gov. Schweitzer along with officials of Arch Coal toured the site and answered questions with local media and the Northern Cheyenne tribe. Schweitzer said the coal giant hopes to have permits by 2013, and start mining by 2016.

In all Arch Coal controls 1.5 billion tons of coal on state and private land in Otter Creek. In June, 2010 when the company toured Otter Creek Arch Coal executives stated that they will aggressively pursue state permitting and hope to begin mining by the middle of the decade.

As of July 2010, two separate lawsuits filed by the Sierra Club and Montana Environmental Information Center were challenging the state lease on the grounds that the Montana Land Board did not properly address the 2.4 billion tons of carbon dioxide emitted by the mined coal prior to the lease.

In January 2010 District Judge Joe Hegel rejected an attempt by Arch Coal and the state of Montana to dismiss lawsuits brought in 2010 by four environmental groups. The rejection of the coal industry and state's challenge will allow the groups to move forward with their lawsuit, which claimed that the sale should have been reviewed under the Montana Environmental Policy Act.

Attorneys for Arch and the state had argued such a review must be done before mining, not at the leasing stage. However, Judge Hegel stated environmentalists had made a reasonable claim — that waiting until a mining application comes in could be too late to protect the constitutional right to a clean and healthful environment.

Jim Bridger Mine expansion in Wyoming
On July 30, 2010, the Bureau of Land Management (BLM) announced that one of 11 federal coal leases pending approval south of Gillette, Wyoming, can be sold, despite strong opposition from environmental groups, who have yet to have their concerns about global warming impacts addressed. The Jim Bridger Mine in southwestern Wyoming is expanding its operations to approximately another 2,000 acres. The expansion includes new lease holdings on private land bordering the mine 35 miles northeast of Rock Springs. The mine, which provides coal to the adjacent Jim Bridger Steam Plant, is already the largest in Sweetwater County. The plant provides electricity to customers of Salt Lake City-based PacifiCorp and Idaho Power in Wyoming and five other Western states.

The BLM will announce its decision on three more leases in separate upcoming decisions. The 11 leases total an estimated 4.5 billion tons of coal distributed between seven mines in the Powder River Basin and would guarantee the life of those mines for the next 20 to 30 years. The first lease, applied for in 2004, is for the Belle Ayr Mine. It covers 1,671 acres and the BLM estimates it contains about 221.7 million tons of mineable coal. The lease is estimated to provide enough reserves for Belle Ayr mine through the year 2030. Wyoming BLM state director Don Simpson wrote in his record of decision that it "is in the public interest" to offer the lease so the reserves are available to meet the EIA's projected national coal demand that is expected to exist until at least 2035. According to the BLM decision document, if Powder River Basin coal is not mined, it would most likely be replaced by coal from other domestic and international coal producers that would be "more costly, worse for the environment, and mined in places where coal mine reclamation may not be as successful."

The BLM also released its report on July 30, 2010, of what it thinks the environmental and economic impact will be of mining six of the leases next to Black Thunder Mine and North Antelope Rochelle Mine, the largest coal mining operation in the U.S. Those six leases include an estimated 2.5 billion tons of coal. The BLM will take comments on the report until Aug. 30.

Coal mining to expand on Wyoming and Montana public lands
On March 22, 2011 Secretary of Interior Ken Salazar stated that his office was opening up four tracts of land in Wyoming's section of the Powder River Basin for coal development. The leases are expected to bring in between $13.4 billion and $21.3 billion in leasing bids and royalties to the federal government and the state of Wyoming, stated Salazar. Wyoming will receive 48% of those revenues, with the rest going to the federal government.

The four tracts of land in northeast Wyoming are expected to yield about 758 million tons of coal. A day after Salazar announced the deal to open public lands to mining operations, Marion Loomis, executive director of the Wyoming Mining Association, stated that Salazar's office had overestimated the amount of money the leases would bring in by "a factor of 10". The real amount of money the mines would likely produce will be closer to $2 billion.

On April 6 2011, environmental groups announced that they are challenging the Obama administration's plan to lease federal coal reserves in the Powder River Basin. Three groups, which included the Sierra Club, Defenders of Wildlife and WildEarth Guardians filed a lawsuit in U.S. District Court that contested the federal leasing program for the land in Wyoming and Montana.

The lawsuit stated that a 1990 decision to "decertify" the Powder River Basin as a coal producing region is no longer valid. The groups contend that the decertification has allowed the government to avoid environmental reviews on the climate change impact of burning coal.

On April 20, 2011 the BLM it would sell leases for more than 61 million tons of coal in central Montana. The leases on 2,680 acres near the Signal Peak Mine, will be auctioned in a competitive sale the summer of 2011. The sale would open an additional 72 million tons of private and state coal reserves to potential mining operations.

Warren Buffett and Bill Gates visit federal coal lands
In November 2010, Warren Buffett and billionaire Bill Gates, a Berkshire director, visited the Black Thunder Mine in Wyoming. Buffett was quoted later as saying that he found the trip to the Black Thunder Mine “fascinating.” Neither gave interviews during the tour, but some speculated that the trip was an indication that the two were looking to invest in the project. However, in the past Bill Gates has stated that coal and natural gas must be phased out by 2050. As the CEO of Berkshire Hathaway, Buffett also owns the Burlington Northern Santa Fe Railroad that transports most of Wyoming's vast coal supply around the country, along with the utility company, MidAmerican Energy, which operates 11 coal-fired power plants, including four in Wyoming.

On Dec. 14, 2010, Bill Gates and Warren Buffett met with President Obama's Oval Office and discussed ways to improve the economy. According to author Jeff Biggers, on Jan 6, 2011, Wall Street analysts said Buffett was betting "big" on Coal. In a Feb. 26, 2011 annual Berkshire Hathaway Shareholder Letter, Buffet said his coal-transporting railroads (nearly 300 million tons of coal a year) "will increase Berkshire's 'normal' earning power by nearly 40% pre-tax and by well over 30% after-tax." On March 22, 2011, citing the nuclear tragedy in Japan and world energy needs, Secretary of Interior Ken Salazar opened 750 million-2.4 billions tons of coal on public lands in Wyoming's section of the Powder River Basin.

Coal Prices
Since October 2009, the price for a one-month contract for Wyoming's Powder River Basin coal, which supplies about 45 percent of all US consumption, rose 67 percent to $13.80 a ton, according to coal broker Evolution Markets. Since 2000, demand for coal has been growing 5 percent annually, according to a study by Tudor, Pickering, Holt & Co. Securities, a Houston-based investment bank, helping drive coal prices up.

Prices for Powder River Basin coal continued to grow in 2010, with spot prices for Powder River Basin coal topping more than $14 per ton in October 2010. The average spot price for 8,800 British thermal unit coal was about $13.40 in December, according to EIA, compared to $9 per ton in December 2009.

Citizen activism
On September 21, 2009 Chuck Kerr with Houston-based Great Northern Properties, which owns lands next to Montana coal properties, urged the state to begin leasing and mining the land. Both private and state coal holdings in Montana must be developed together.

The Northern Plains Resource Council countered that the coal reserves had not been analyzed properly for environmental impacts associated with the mining. Likewise, the Montana Environmental Information Center, said that the revenue projections for the land development are overly inflated and do not take into account dwindling demand for coal or concerns about carbon output.

Montana Land Board Faces Opposition
On February 2, 2010 the Montana Land Board faced vocal opposition from the Northern Plains Resource Council who wants the Land Board to reconsider leasing Otter Creek for mining rights. Former Resource Council President Beth Kaeding claimed that mining in the area would hurt local farmers.

"We feel that strip mining down here, there's no transportation for this, there's going to be so many impacts if this project goes forward," Kaeding said, "and we'd just like those examined and considered before this goes forward."

In mid-February 2010, students spoke in Helena at the public Land Board meeting to oppose lowering the State's bid on Otter Creek coal. In Missoula, students from Hellgate High School protested in the streets in opposition to the Land Board's decision to sell off public lands to coal development, chanting "Hell no to dirty coal!".

On March 18, 2010 the Montana Land Board approved the leasing of Otter Creek coal to Arch Coal. Prior to the Land Board's 3-2 vote, five protesters were arrested at the Land Board's Capitol meeting room while they chanted "Hands off Otter Creek - you're not listening!"

Critics of the approved lease state that there are still many opportunities to halt the mining. They cite the fact that new railroads must be built and those hurdles will have to clear many federal and state environmental regulations. The proposed mines location, which is close to Yellowstone Park, has also caused objections from some in the environmental community. A gold mine was proposed in the past in the same area, but was abandoned due to similar concerns.

In March of 2010 Helena's Independent Record held a readers' poll to gauge support for the Otter Creek lease. The question was as follows: “Do you agree with the Land Board’s decision to approve leasing 570 million tons of state-owned coal for development into a mine in southeastern Montana’s Otter Creek Valley for 15 centers per ton? Seventy-five percent of the responses, 248 of them, were “no.” The other 25 percent of the responses to the unscientific poll, 84 votes, were “yes.”

Opposition to Governor Schweitzer's Otter Creek Position
On March 29, 2010 Montana Governor Brian Schweitzer stated that he will tie the release of frozen state grants to local support for Otter Creek coal tract leases in southeastern Montana. Schweitzer stated that he did not want "any community to use coal money that didn't want to use coal money."

"This money is supposed to be used for schools and he's trying to issue it as a slush fund to spread around the state to curry favor for his administration and essentially buy or blackmail communities' support for coal," said Jim Jensen of the Montana Environmental Information Center (MEIC).

Wrote Schweitzer in a letter to community leaders, "The potential revenue from the sale of Otter Creek coal might allow for your project/projects to be funded. Please return a letter confirming that you ‘support the use of coal money for the completion of your project/projects."

Critics said that Schweitzer's tactics smacks of a Third World dictatorship.

Schweitzer reiterated this position across the state. "[If] coal is produced, the revenues generated are constitutionally required to go to support schools,"said MEIC. "That's true for the $86 million bonus bid as well. What the governor is doing with this strong-armed tactic, which is reminiscent of the typical Banana Republic dictator, is violating his constitutional duty to the (Coal) Trust. He has an absolute obligation and fidelity to the trust, and not to have what's known as divided interest."

Earthjustice Sues State of Montana
On May 14, 2010 the Montana Environmental Information Center ("MEIC") and Sierra Club, represented by Earthjustice, took legal action to challenge the Otter Creek strip mine in southeastern Montana. The lawsuit filed in state court alleged that the state Land Board's decision to lease 572 million tons of coal in Otter Creek for mining, without first examining the potential environmental impact, "violated the state's constitutional and fiduciary obligation to prevent unreasonable environmental degradation."

July 2010: Planned lawsuit against BLM over leases and greenhouse gas emissions
On July 12, 2010, WildEarth Guardians, Defenders of Wildlife, and Sierra Club said they plan to file a lawsuit in federal court alleging that the Department of Interior and Bureau of Land Management (BLM) are not properly evaluating the impact of greenhouse gases created by the sale of the rights to massive tracts of coal in northeast Wyoming. The groups had previously raised similar issues in a petition and subsequent lawsuit against Interior in a Denver federal court, as well as a recently withdrawn appeal at the Interior Board of Land Appeals of a coal lease known as West Antelope II.

The suit, to be filed in the US District Court for the District of Columbia, alleges that federal agencies failed to consider air quality impacts, as outlined under the Federal Land Policy and Management Act, and did not adequately address impacts of greenhouse gases or consider alternatives. The suit will also challenge the agency's 20-year-old decertification of the basin as a coal production region, which allows companies to nominate and bid on what are essentially customized tracts of coal. The groups say the current process, known as leasing by application, allows companies to skirt what should be a more comprehensive environmental review. The groups hope the suit has the potential to change the federal government's environmental review process for the billions of tons of coal it sells in the Powder River Basin, slowing the acquisition of reserves by the four largest US coal companies. The region annually produces over 400 million short tons of coal -- some 40% of the coal produced in the US.

The leasing issue has already drawn the attention of major PRB producers such as Peabody Energy, Arch Coal, Cloud Peak Energy, and Alpha Natural Resources, who have met with state officials to discuss various concerns about future reserve acquisitions. In the same week as the planned lawsuit was announced, coal industry representatives are scheduled to meet in Washington with the congressional offices of western- and coal-producing states. Industry officials say the lawsuits and appeals for new coal leases have forced them to lengthen the amount of time they allow for acquiring reserves, a point Wyoming Governor Dave Freudenthal has raised with top officials at Interior in letters and face-to-face meetings over the past year.

Group Seeks to Stall Montana Coal Railroad
On July 27, 2010, the Northern Plains Resource Council asked the federal Surface Transportation Board to reconsider its approval of a proposed $550 million railroad that would open new areas of Montana's section of the Powder River Basin to coal mining. The group wants a new environmental impact study done on the railroad proposal, noting that many things have changed since the Board approved the original plan.

BLM denies request to change coal leasing process
On February 8, 2011, the U.S. Bureau of Land Management (BLM) denied a petition brought by WildEarth Guardians and the Sierra Club to change its process for selling access to the nation's most productive coal deposits.

Since 1990, the government has allowed the coal industry to nominate deposits it wishes to mine in the Powder River Basin in northeast Wyoming and southeast Montana. Such deposits typically are located next to existing strip mines in the Powder River Basin. The groups contended that such a change would help create more competition for the leases while improving oversight of coal's contribution to climate change. The groups also asked the government to impose a "carbon fee" on new coal leases to reimburse the BLM for addressing how coal leasing affects global warming. The BLM denied the requests.

200 million ton coal lease in Wyoming overturned
In late March, 2011 the WildEarth Guardians helped to overturn a U.S. Forest Service decision authorizing more than 222 million tons of coal mining in Wyoming's Powder River Basin.

In March 2011 the Rocky Mountain Regional Office of the Forest Service “reversed in whole” a decision that consented to the leasing of more than 222 million tons of coal to be mined. The U.S. Bureau of Land Management issues coal leases, however if leases include National Forests or Grasslands, they cannot lease them without getting permissions from the Forest Service first.

In this case, the Forest Service consented to the issuance of the South Hilight coal lease, which would have facilitated the expansion of the Black Thunder Mine in Wyoming. The lease included portions of the Thunder Basin National Grassland in northeastern Wyoming. When burned, WildEarth Guardians contended, "the coal would release more than 400,000,000 tons of carbon dioxide—equal to the annual emissions from 87 coal-fired power plants."

Citizen groups

 * Citizens for Clean Energy
 * Montana Environmental Information Center
 * Northern Plains Resource Council
 * Climate Ground Zero
 * Northern Rockies Rising Tide

Related SourceWatch articles
To see a listing of coal mines in a particular state, click on the map:
 * Wyoming and coal
 * Montana and coal
 * Millennium Bulk Terminals
 * Coal reserves
 * Railroads and coal
 * U.S. coal politics
 * Coal and jobs in the United States
 * Coal phase-out
 * Headquarters of U.S. coal mining companies
 * Global list of coal mining companies and agencies
 * Proposed coal mines
 * Coal Exports from Northwest United States Ports
 * Coal



External resources

 * Wyoming coal mining
 * Geological history
 * USGS Open-File Report on impacts of CBM development in the region
 * James Luppens et al, Assessment of Coal Geology, Resources, and Reserves in the Gillette Coalfield, Powder River Basin, Wyoming, US Geological Survey Open-File Report 2008-1202, 2008
 * Thunder Basin National Grassland
 * Leslie Glustrom, "Coal: Cheap and Abundant ... Or Is It?" February 2009
 * Current statistics, news items, documents and photos of the Powder River Basin at CoalDiver